There are a few recent studies that caught my eye.
The first is an interesting paper from Brookings that is a proposal for an Enrico Moretti-style “big push” approach to boost innovation sector jobs in cities outside the superstars. It’s called “The case for growth centers: How to spread tech innovation across America.”
The authors make the point that innovation jobs have been concentrating in America. They observe:
Most notably, just five top innovation metro areas—Boston, San Francisco, San Jose, Seattle, and San Diego—accounted for more than 90% of the nation’s innovation-sector growth during the years 2005 to 2017. In this fashion, they have increased their share of the nation’s total innovation employment from 17.6% to 22.8% since 2005. In contrast, the bottom 90% of metro areas (343 of them) lost share.
Here’s their map of where innovation sector jobs have been adding and losing share:
Their proposal is for a major federal capital injection to boost innovation and R&D in 8-10 different regions selected via a competitive process.
Another Brookings report by Alan Berube look at “Small and midsized legacy communities: : Trends, assets, and principles for action.” Though his analysis is at the county level, he finds many of the same challenges facing these communities that I observed in my MI report on “How Stagnating Communities Can Prepare for the Future.”
And finally, Strada Education Network and EMSI have put out a report called “The New Geography of Skills“, which uses a concept called “skills shapes” to look at local market talent requirements.
What’s going on in Pittsburgh, Atlanta, Raleigh, Albany, NY, Madison, WI, and Grand Rapids, MI?
Also, whats the deal with what looks like Charleston SC – Savannah – Jacksonville
Charleston and Savannah are lifestyle cities. We’ve talked before about people who are able to just throw a dart at a map as to where they live and work; I assume a higher percentage of techies and their investors choose to live and work there compared to, say, Rockford.
Jacksonville? Got me. Though all three are medium-sized ports. According to Wikipedia they each handle more freight than the Port of Chicago, and logistics is a significant if unsexy pillar of our own “innovation economy.”
Sam Smith says
Military bases. Silicon Valley itself was largely an offshoot of the defense and aeronautics industry from World War II. My grandfather migrated from upstate New York to California in the 1940’s and worked at Hughes Aircraft which would later become an electronics and communications company.
Military bases provide a massive amount of R&D capital separate from venture capital which can get turbocharged if an ocean port, a research university, or a large metro are nearby.
Kenny Easwaran says
Raleigh, Madison, and Pittsburgh are places one might naturally expect on this list, given the university connections, and the specific investments there by Epic (Madison) and Uber (Pittsburgh). Atlanta, Albany, Grand Rapids, and Charleston, Savannah, Jacksonville, are much more of a surprise.
Atlanta has major universities and corporate headquarters, but smaller southern cities like Jacksonville do surprise me. What can places like The City That Shall Not Be Names learn from Pittsburgh? What can Nashville learn from Raleigh? Is it all about research universities? Is that the key? Is the economic geography important. Do innovative cities need a certain ‘sphere of influence’ in which to operate? Except for the West Coast, all the cities with growing innovation seem to be some distance from each other. They aren’t clustering together.
Chris Barnett says
Bingo. The US seems to be developing”Regional capitals” with supporting hinterlands (in the economic sense).
Mark Hansen says
One thing I’ve noticed about is that the more white flight a metropolitan area suffered from historically, the more it struggles now. White flight, I believe, is both a prime driver and symptom of regional dysfunction in America. It creates a negative feedback loop. From a cursory glance, it appears that Cincinnati dipped to under 50% white, while cities like Columbus, Minneapolis and Pittsburgh remained over 60% white. I think that indicates something important.
Of course, I want to stress that I don’t think a city is better of specifically for being “more white”. Nothing could be farther from the truth. Rather, I think a region is worse off the more segregated it is.
I think the best thing a region like Cincinnati could do is focus on bringing people from all walks of life together.
Yes, The clannish politics, economy, and culture of the City That Shall Not Be Named are it’s main impediment to growth today. But, how did it become that way? To what degree is that a function of its place in the larger american economy over generations? Would Cincinnati have maintained an openness and adaptability if other nearby cities such as Indy and Columbus had not emerged to draw away some of it’s workers, wealth, and investments.with which Cincinnati might have created better public services and more innovative industries? Is the same economic geography still at work in the most rapidly changing parts of the economy? Is Cincinnati’s proximity to other cities that are better at innovation still an important reason for its poor economic performance in the last generation? We were told that tech would make geography irrelevant, but I think it still matters very much. Why else would tech’s benefits be so concentrated in a few places?
Grand Rapids is an interesting study. It’s isolation makes it impossible to find yourself “stuck” there traveling city to city. With it’s Dutch legacy it’s possibly the Metro version of this New Yorker story from a few years back. https://www.newyorker.com/magazine/2017/11/13/where-the-small-town-american-dream-lives-on
Chris Barnett says
In somewhat related news, two more large regional law firms announced a merger, this time East Coast + Midwest. But neither firm is big in NY or Chicago…the combination joins Drinker Biddle & Reath (Philly) with Faegre Baker & Daniels (MSP & Indy). Charles Schwab is moving to Texas after its TD Ameritrade merger.
Some time back Aaron predicted that “back office” work would become the bread and butter of second and third tier metros…many of which are also regional hub/destination cities for younger professionals.
George Mattei says
You definitely see that in Columbus. Although we’ve had an uptick in VC and a few break-out companies lately, the main growth drivers are still things I would associate with “back-office” or “back-room/warehouse” type jobs. When the big boys come and invest it’s not typically the R&D/front office stuff. Lots of data centers going up. High-tech warehousing such as Amazon with all its robots. A few growing tech companies, such as Upstart, have recently established “2nd headquarters” here in Columbus, but it remains to be seen how many are true tech employees vs. accounting/admin type jobs (although there are clearly some development jobs). So it’s an upwards trajectory, just not quite clear yet where it leads-Midwest Tech Hub or Midwest Back Office hub?
Chris Barnett says
The recent logistics growth in the Columbus metro, I believe, was driven to some degree by the truck driver regulations limiting driving shifts.
Columbus is 3 hours closer to the East Coast metros than Indy, whose warehouse growth cycle started 30+ years ago based on being 12 hours’ drive from a significant share of the US population. (Basically we’re 12 hours or less from everything between NYC, the Gulf, and the Plains, except Florida.)
Indy’s former location advantage is now a little less valuable in an era of 10-hour limits on drivers, though Sunbelt population growth from NC to Oklahoma mitigates that some.
But losing the Amazon logistics hub to Nashville is a real loss for Indy (and for Columbus, and especially for Cincinnati’s underutilized airport, which could have been a hub for Amazon Air Cargo).
Chris Barnett says
But regarding Amazon, the real growth engine is Amazon Web Services not the physical stuff business.
I could imagine Bezos selling the retail and distribution business to vampire squids for top dollar.
Columbus and Indy will grow much more from professional and business services than from logistics. Columbus can’t fundamentally overcome the shift of the economic center of gravity to the south and west and the willingness of southern states to have much lower taxes and much less regulation of land and labor. Banking, finance, insurance, engineering and bio-medical services, and everything that goes on at OSU will require people who want a higher level of public services than is provided in southern cities. That’s who Midwestern metros have to go for.
Jacob Mecklenborg says
The Amazon Prime Air Hub *is* being built at CVG. Aside from a relative handful of higher-paying IT jobs, it’s going to be a bunch of junk jobs for Cincinnati and Northern Kentucky.
Chris Barnett says
Just like the Amazon warehouses around CMH and IND.